A strong rebuilding effort after superstorm Sandy could boost New Jersey’s economy, but that’s not enough to persuade a major Wall Street ratings agency to raise the state’s credit rating amid other serious budget concerns.

Christie holding a town hall meeting in Montville Feb. 27, 2013.

New Jersey’s heavy debt, lingering high unemployment and a budget that remains “structurally unbalanced” are reasons to keep the state’s credit rating at AA-, Standard & Poor’s said Wednesday in an analysis of the $32.9 billion budget Governor Christie proposed last month.

That rating is the agency’s fourth highest, but only California and Illinois have worse grades from Standard & Poor’s among U.S. states.

With a strong credit rating, the state is able to borrow money from a wide range of investors with generally low interest. But a weakened credit rating scares off investors and can drive up interest rates, making it harder and more expensive for the state to borrow money for long-term projects like roads, bridges and schools, a burden the taxpayers ultimately bear.

Christie, a Republican seeking a second term, presented the new state spending plan on Feb. 26, calling for increased spending on public employee pensions, education and health care. Lawmakers are in the process of reviewing the new spending plan and will have to decide by July 1, the start of the new fiscal year, whether to adopt it unchanged or advance their own budget.

Christie emphasized the state’s ongoing recovery from superstorm Sandy, which caused widespread damage after slamming into New Jersey on Oct. 29, during his budget address last month.

“I expect to go to the Jersey Shore every summer for the rest of my life, including this summer of 2013,” he told lawmakers.

Standard & Poor’s said the Sandy recovery, which will be fueled by billions of dollars in federal aid, should boost the state’s economy, particularly helping sales tax collections.

“We recognize that there is the potential that above-average income tax collections in fiscal 2013, coupled with a very aggressive reconstruction effort, could provide some upside to the revenue forecast,” credit analyst John Sugden said in a statement.

But the agency said it’s unclear right now if enough recovery will occur in time for a strong summer tourism season, and whether federal spending cuts known as the sequester will take dollars away from the relief package Congress approved in January.

Other budget problems also remain, including rising debt and pension obligations. And recent job growth has failed to keep pace with a growing job market, the analysis noted.

The report cited a number of additional concerns, including a fear that revenue estimates may be too high, and that some new sources of revenue, such as online gambling, are not yet proven or reliable.

The state Department of Treasury responded to the report strongly, calling it “a shallow analysis that reflects a fundamental lack of understanding as to how Governor Christie’s administration has brought New Jersey back from the brink of fiscal ruin after years of mismanagement.”

“S&P has not had a strong predictive record in the financial or bond markets, and we don’t believe that has changed in this report,” Treasury said in a statement.

A strong rebuilding effort after superstorm Sandy could boost New Jersey’s economy, but that’s not enough to persuade a major Wall Street ratings agency to raise the state’s credit rating amid other serious budget concerns.

New Jersey’s heavy debt, lingering high unemployment and a budget that remains “structurally unbalanced” are reasons to keep the state’s credit rating at AA-, Standard & Poor’s said Wednesday in an analysis of the $32.9 billion budget Governor Christie proposed last month.

That rating is the agency’s fourth highest, but only California and Illinois have worse grades from Standard & Poor’s among U.S. states.

With a strong credit rating, the state is able to borrow money from a wide range of investors with generally low interest. But a weakened credit rating scares off investors and can drive up interest rates, making it harder and more expensive for the state to borrow money for long-term projects like roads, bridges and schools, a burden the taxpayers ultimately bear.

Christie, a Republican seeking a second term, presented the new state spending plan on Feb. 26, calling for increased spending on public employee pensions, education and health care. Lawmakers are in the process of reviewing the new spending plan and will have to decide by July 1, the start of the new fiscal year, whether to adopt it unchanged or advance their own budget.

Christie emphasized the state’s ongoing recovery from superstorm Sandy, which caused widespread damage after slamming into New Jersey on Oct. 29, during his budget address last month.

“I expect to go to the Jersey Shore every summer for the rest of my life, including this summer of 2013,” he told lawmakers.

Standard & Poor’s said the Sandy recovery, which will be fueled by billions of dollars in federal aid, should boost the state’s economy, particularly helping sales tax collections.

“We recognize that there is the potential that above-average income tax collections in fiscal 2013, coupled with a very aggressive reconstruction effort, could provide some upside to the revenue forecast,” credit analyst John Sugden said in a statement.

But the agency said it’s unclear right now if enough recovery will occur in time for a strong summer tourism season, and whether federal spending cuts known as the sequester will take dollars away from the relief package Congress approved in January.

Other budget problems also remain, including rising debt and pension obligations. And recent job growth has failed to keep pace with a growing job market, the analysis noted.

The report cited a number of additional concerns, including a fear that revenue estimates may be too high, and that some new sources of revenue, such as online gambling, are not yet proven or reliable.

The state Department of Treasury responded to the report strongly, calling it “a shallow analysis that reflects a fundamental lack of understanding as to how Governor Christie’s administration has brought New Jersey back from the brink of fiscal ruin after years of mismanagement.”

“S&P has not had a strong predictive record in the financial or bond markets, and we don’t believe that has changed in this report,” Treasury said in a statement.